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It takes a lifetime to get a basic understanding
of how mankind thinks, but evenyears of observation can’t
predict many of the decisions people make. Irrespective, I’ve
done my best to interpret what I’ve observed, as such analysis have
served as the most powerful tool in my decision-making process.
Particularly during terrible economic conditions, such foreknowledge of
man’s tendencies can mean the difference between financial life and
death.

This morning, I finished Ayn
Rand’s Fountainhead, the beautifully-written precursor (by
14 years) of Atlas Shrugged. I can imagine an idealistic
Alan Greenspan reading it circa 1950, pondering, as I, the evils of human
collectivism and tragic mistakes such thinking spawns, such as fiat
currency. Back then, I’m sure he felt as strongly as I do
now, but didn’t yet understand HUMAN NATURE, particularly that the
“dark side” would be powerful enough to lure him to a life of
deceit, and consequently divestiture of his most fervent beliefs.

In the book’s Afterward,
Rand describes the character of Ellsworth Toohey as a “noted economist,
critic, and liberal,” and more specifically, a “Noted anything
and everything,” which made me think about mankind’s
collectivist tendency to create consensus beliefs to hide behind, and subsequently
“Noted” leaders to publicly espouse such beliefs.
Politicians, bankers, and the media, the “troika” of evil in
today’s society, are comprised of experts in
corralling the public zeitgeist and converting it to
tangible propaganda, whereas only the most INDEPENDENT, FREE-THINKING
individuals can escape their influence.

My readers understand the importance of
critical thinking, particularly in today’s era of historical
change in the economic, political, and soon-to-be social backdrop of
the Western world. TPTB are well-aware of this inflection point, and
thus utilize increasingly draconian methods of influence to maintain
order. This saga was played out brilliantly in Rand’s Atlas
Shrugged, and we all know how that ended…

Today, I initially intended to write
about ramifications of the MF Global collapse, but that discussion was put on
hold following yesterday’s ugly market action. I will get to the
horrific Cartel attack shortly, but my mind is focused more on the PPT
lately, as described in recent RANTS. The title of this RANT was
inspired by last night’s Denver Broncos comeback, but there was nothing
ILLEGAL about Tim Tebow running over the Jets, as when the
“President’s Working Group on Financial Markets” runs roughshod
over stock exchange rules, and more importantly thespirit of free
markets.

I’ve discussed in detail my
observation that the PPT’s mandate to ‘protect stock markets in
times of crisis’ was exceeded circa 2000, not un-coincidentally when
the U.S. economy peaked. The 9/11 tragedy was the PPT’s first
full-scale test, and since that time I have observed it increase the
group’s scope in virtual lockstep with the decline of America’s
economy, dollar, and reputation. The two most important tactics in
their playbook are early morning support of Dow Futures to “set the
tone” for the day and “HAIL MARY” goosing at the end of the
day, to “instill confidence” that all bad news has been
discounted, and secondarily cause the collectivist media to
report as such.

As angry as it makes me to watch the
Cartel blatantly attack PAPER gold and silver prices as
yesterday (and today), I find that it doesn’t bother me much anymore,
as I know my PHYSICAL gold and silver coins sit quietly in a
vault, as unchanged in value as untarnished by the elements. To the
contrary, mining stocks wereviolently decimated yesterday (and
today), creating REAL losses in brokerage accounts that may or may not ever be
recovered; only time will tell on that note.

By the way, while the world fretted
yesterday about imminent financial collapse, and mining stocks plunged by 5%,
on average, thanks to the Cartel’s NAKED SHORT SELLING ALGORITHM
PROGRAMS, Miles Franklin saw strongdemand for PHYSICAL gold and silver.
Yes, 2011 is turning out to be a MAJOR inflection point in the now eleven-year-old
PM bull market, as for the first time investors are AGGRESSIVELY
ACCUMULATING PHYSICAL metal on EACH and EVERY DIP. Miles Franklin had
one of its strongest months in YEARS following the September DEATH STAR
ATTACKS that took PAPER gold and silver down by 20% and 40%, respectively, in
a matter of weeks, yielding sharply higher PHYSICAL premiums. In fact,
I believe five of its best ten days EVER occurred during that period, symbolizing
that more and more investors are THINKING CRITICALLY and INDEPENDENTLY,
seeing through the façade into what’s really occurring
in the world.

I’ve written nearly every day
this week of my experiences watching PPT operations in the early morning
hours. Today, I walked into the gym to see Dow Futures at +40 points,
YET AGAIN turning positive the day after a sharp decline. If there is
ONE “sixth-sigma” phenomenon to focus on in the markets, it is
the near GUARANTEE that Dow Futures will be called higher after a major
market decline, and today was no exception. Not only that, within
MINUTES it jumped to +108, recovering nearly ALL of yesterday’s losses
despite ZERO news, while gold of course was mired near yesterday’s
lows.

The only material news last night was
that the Shanghai futures exchange raised margins on silver, once again
explaining why silver was trashed so violently yesterday. Why silver
margins would be increased when silver has been trading in a tight range for
weeks is beyond me, particularly AFTER such a huge smash just hours
before. But then again, following “D-DAY” a year ago, ALL
Cartel activities have been stepped up to epic proportions, particularly its
manipulation of margin requirements to create PAPER liquidations.
“D-DAY” represented the first INTRADAY silver margin increase
EVER, and thereafter we have seen a cornucopia of sinister margin increase
strategies, particularly the new tendency to raise PM margin requirements
AFTER gold and silver prices fall. Remember the SUNDAY NIGHT PAPER
SILVER MASSACRE, when margins were increased FIVE TIMES in response to
silver’s attack on its all-time high price of $50/ounce?

And, by the way, the reason the Cartel
needed to PULL ITS BIDS on a SUNDAY NIGHT in early May with the Chinese
markets closed, and then falsely announce that bin Laden had been killed (as
if that means anything), was that in a normal market surging
to ALL-TIME HIGHS, a margin increase would injure the SHORTS, not the longs,
as the SHORTS would be the ones receiving margin calls! Of course, when
the shorts (JP Morgan) are GOVERNMENT-BACKED, they are not issued margin
calls, and even if they were, the government would just print the money to
meet them. Conversely, “the shorts” ATTACK viciously with
illegal, NAKED transactions (as they did Sunday night, May 1st,
and YESTERDAY), and THEN margins are raised to DESTROY the longs stupid
enough to take them on. You’d think the CONSTANT LOSSES traders
generate in this game of “rinse and repeat” would prevent them
from still playing, but they’re still there, albeit in lesser volumes.
But don’t worry, Open Interest continues to decline for this reason,
and the MF Global fiasco will only contribute to this trend in the coming
weeks and months.

OK, so while Dow Futures were being
goosed yesterday morning despite crumbling European markets, gold was
enjoying its typical early morning walk down for no apparent reason.
The Dow/Gold directional ALGOs were on, only allowing PAPER gold to tick up
when the Dow was rising, but at only half the rate, as opposed to when Dow
Futures decline, at which point gold prices fall at twice the rate.
Same pattern as I’ve watched for years, as well as the incredibly
irritating tendency for the gold price to tick down essentially EVERY time it
is shown on the CNBC screen.

Anyhow, with the European crisis once
again reaching DEFCON 1, the Cartel used EVERY ONE OF its tricks yesterday,
including EVERY TOOL DOCUMENTED in my “Cartel primers” published
in June, the “2010 and 2011 COMEX Manipulation Pictorials,” links
below:

As you can see, yesterday’s high
print was at EXACTLY 3:00 AM EST, followed by a vicious smash at the odd hour
of 6:30 AM EST. Next, the typical attack at the COMEX open at EXACTLY
8:20 AM EST, another just before the PM fix at 10:00 AM EST, and the coup
de grace, a VIOLENT DEATH STAR ATTACK at EXACTLY 12:00 PM EST, the
notorious “cap of last resort” time.

Simultaneously, we watched the PPT
fight weakening European stock and bond markets tooth and nail, until finally
it succumbed to the pressure of being the ONLY market in the world to not be
down sharply. The Dow then spent the last two hours trading between
-160 and -200, until it MAGICALLY leapt in the FINAL TWO MINUTES of trading
to close at -134, down a measly 1% while the world crashed and burned.
No matter that American Airlines was down 6% to a new all-time low, or the
major banking stocks, on average, by 5%.

Thanks to the blatant FASB ACCOUNTING
FRAUD perpetrated on America to enable WALL STREET to record “record
bonuses,” the financial sector accounts for a RECORD 29% of ALL U.S.
profits. Yes, those beautiful “profits” generated from the
accounting treatment of DECLINES in corporate bonds, and real estate
write-ups during a real-estate crash, account for the LARGEST percentage of
U.S. profits.

If that doesn’t illustrate how
dire America’s financial situation is, I don’t know what does.

On second thought, how about the fact
that these banks received taxpayer-funded, printing press-created BAILOUTS as
rewards for destroying the world, were granted the right to report PROFITS
when only LOSSES exist, AND didn’t have to pay income taxes?

Or how about this chart, showing that
American businesses’ cumulative penchant for DEBT make GREEK companies
look like fiscal conservatives. Something tells me the BANKS are
skewing this chart vastly higher than the average American
company, and that the TAXPAYERS will be liable for paying off these debts.

Anyhow, it truly amazes me how XLF, the
financial stock ETF, which represents nearly a THIRD of ALL U.S. profits, can
be DOWN 22% for the year, yet the Dow still UP 2%; not to mention, in an
environment where essentially EVERY STOCK MARKET ON EARTH is down by at least
10%-15%! I can’t imagine how much money has been thrown into PPT
operations this year, particularly when turds like JP Morgan and Bank of
America are pulling down the Dow. I’d love to see what price the
Dow would be if it still included the bankrupted (and subsequently bailed
out) General Motors, Citigroup, and AIG, and what it WILL look like before
the soon-to-be bankrupted (and subsequently bailed out) JP Morgan and Bank of
America are replaced.

Oh well, nice to see ZeroHedge actually
giving some air time to the blatant Dow propping described above.
Perhaps one day they’ll publish my “conspiracy theory”
findings about the gold cartel…NOT!

Before I get to today’s
“horrible headlines”, I’d like to comment about
yesterday’s RANT regarding COMEX options expiration, as well as an
extremely important Cartel-related topic. Yesterday, I stated clearly
that gold and silver may well fall this week, but NOT necessarily due to the
upcoming options expiration on Tuesday. Options expiration has had
essentially ZERO impact on PAPER gold and silver trading in 2011, in my view
because the overall goal of attacking gold ANY TIME it makes a material surge
higher has taken precedent, whether it happens prior to an options expiration
period or not. Clearly, the European meltdown is nearing its
denouement, and consequently ANY and ALL Cartel tools have been deployed to
take PMs out of the “safe haven spotlight” while Greece, Italy
and the rest go to financial heaven.

THAT is why the PM sector was smashed
yesterday, and why the Cartel followed through this morning with a similar,
nonsensical SMASH at EXACTLY the COMEX opening at 8:20 AM EST, and AGAIN (as
I’m proofreading) at EXACTLY 12:00 PM EST!

The best way to look at Cartel attacks
is to realize they are RARELY executed for a specific reason.
It is the BIG PICTURE that matters, the OVERARCHING GOAL of preventing PM
sentiment from growing too strong, threatening commencement of the imminent
PHYSICAL buying frenzy that will ultimately bring the system
down. Isolated events such as options expirations are
just NOISE in the big picture, particularly when viewed as in the charts
below.

Looking at DAILY data, gold has fallen
8% or more TEN times in the past decade…

But on a MONTHLY basis, this number
falls to FIVE times…

While on a QUARTERLY basis, it drops to
just ONE time…

And on an ANNUAL basis…NEVER!

Finally, research from one of the most
brilliant, yet unknown gold analysts in the world, my good friend from GATA,
James McShirley. While I have toiled to document the TIMES when the
Cartel is most likely to attack, he has analyzed the statistical
anomalies caused by their capping activities over the past
decade,specifically the “1% and 2% rules.” James has
done magnificent work tabulating the rarity of COMEX gold prices rising by
1%, or god forbid 2%, and when hell freezes over, a higher PM fix than the AM
fix. These rules define the term “sixth-sigma,” and at some
time soon I hope to share his data with you.

James is obsessed with “capping
statistics,” and put out the fantastic note below last night, which I
view as far more relevant than minimal events such as COMEX options
expirations. This is not to say his analysis is definitively correct,
as only time will tell. But when creating a mosaic of
the overall enigmatic movement of the PM sector, it helps to have as key
pieces of the puzzle, such as this, at your disposal.

It’s obvious that there is real
forceful opposition to gold getting past the $1,770- $1,790 area. I’m
sure Dec. options expiration is significant, but there is likely another
reason in play. The $1,770 – $1,7790 area could also be due to yet
another cartel limit, this one being the maximum yearly gold gain allowed.
Just like the 2% daily rule there is no other commodity that I can find that
has had such consistent gains on a yearly basis the past decade. In fact at
$1,777 gold has gained 26.6% for 2011, virtually IDENTICAL to the gains for
both 2010 and 2009. ( +26.6% and +26.9%) Furthermore if you take the 8 best
years of the past decade, (throwing out 2008) the average is +24.8%. Oddly
enough (or not) that is an average of …. wait for it, … 2% per
month. Like most peculiarities surrounding gold this can’t be a
coincidence, and is certainly indicative of the level of manipulation when
considered in total. The evidence suggests the cartel has maximum allowed
gains not only on a daily basis, but probably even weekly, monthly, and even
yearly bases. As time permits I intend to research weekly and monthly gold
gains, which I believe will also show a similar manipulated pattern.

Regardless of the cause of the pressure
the upcoming week looks stacked against friends of gold. If December
continues the trend of “consolidation” as MSM calls it, then 2012
could quickly develop into some spectacular gains. $1,780 X 126.6% =
$2,253.50 for 2012? Statistically it has a 100% chance since 2009, and an 88.9%
chance since 2002. Let’s get those standard deviation from norm
modelers out there to help calculate this stuff!

And finally, this week’s final
installation of “horrible headlines”, starring….THE
WHOLE WORLD!

Let’s start today with a headline
that’s horrible only to the Cartel, ROCKETING worldwide demand for
gold, particularly in China, the world’s richest nation…

And thanks to the HOSTAGE-LIKE GRIP
America holds over China due to its ENORMOUS holdings of U.S. Treasuries (if
China sells, the whole world follows), the Chinese government may have FAR
LESS capital to invest overseas than the consensus view…

As for America, it just gets uglier and
uglier, despite the PPT’s insistence that a stable Dow cures all
ills. Once again, American Airlines closed at a new low, before being
downgraded yet again by Standard & Poor’s. It’s only a
matter of time before it goes bankrupt, with its 73,000 employees.

…then consider we are just FIVE
DAYS from the Supercommittee deadline, which could prove CATASTROPHIC if it
ends (the day before Thanksgiving) with yet another round of Boehner vs. Reed
jawboning. Cuts or not, the current debt ceiling of $15.194 TRILLION
will be breached shortly, and agreement or not, you can bet it will be raised
to $16.394 TRILLION by year end.

I guess that’s enough for this
week, and perhaps I’ll take the weekend off given that my
mother’s in town from New York (we’ll see). Steel your
minds, and wills, for what is coming later this year, as well as 2012, which
will likely be the most pivotal of our lives.

Ignore the NOISE around you, from
talking heads, newsletter writers, Cartel attacks, PPT operations, and ANYONE
or ANYTHING seeking to divert your attention from what’s REALLY going
on in. Think independently of this noise, and you will know the
right decisions to make.

Andrew Hoffman was a buy-side and sell-side analyst in the United States (including six years as an II-ranked oilfield service analyst at Salomon Smith Barney), but since 2002 his focus has been entirely in the metals markets, principally gold and silver. He recently worked as a consultant to junior mining companies, head of Corporate Development, and VP of Investor Relations for different mining ventures, and is now the Director of Marketing for Miles Franklin, a U.S.-based bullion dealer.